Directors of companies are accountable to creditors in Italy

Directors of companies in Italy are required to comply with specific obligations aimed at maintaining the integrity of the company's assets. In cases of intentional or negligent violation of these obligations, directors' liability increases in order to protect both the company and its creditors.

Art. 2394 of the Italian Civil Code states that directors of companies are liable to company creditors for non-observance of their duties concerning preservation of the company’s assets. Under such circumstances, this clause gives a company's creditors the right to contest the management of the business. When the company's assets are insufficient to satisfy creditors' claims, they may file a lawsuit against the directors. The goal of the creditors' action is compensation for the damage caused by the directors' conduct regarding the company, on whose assets the creditors had relied.

Action can be brought by creditors only when the company's assets are insufficient to satisfy their claims. “Insufficiency” of company assets generally means a situation in which liabilities exceed assets. Insufficiency is not the same as insolvency, a condition that can lead to the declaration of bankruptcy, manifested by default on its payment obligations, or other evident indications which show the company is no longer able to meet its obligations.

For instance, insufficiency may be the consequence of directors' misconduct when they: (i) fail to pursue action against shareholders who do not pay the quota due from them; (ii) allow the company to purchase its own shares in excess of the limit set forth in Articles 2357–2358 of the Italian Civil Code; or (iii) fail to call a shareholder meeting without delay when the company's capital has diminished by more than one-third as a result of losses. 

Creditors of the company must bring action against the directors within five years from the time when the damage results, i.e. from the time when a diligent observer could have had knowledge that the assets of the company were insufficient to satisfy the claims of creditors. Many court rulings indicate that the publication of a company's annual accounts marks this moment. 

However, since it's hard to pinpoint that exact moment when the damage results, it is often considered to coincide with the bankruptcy judgment's publication. For this reason, the bankruptcy receiver, who also has the right to bring the company's action against the directors under Art. 2394-bis of the Italian Civil Code, can bring the creditors' action against them.

The two actions, even if proposed at the same time, remain distinct, as they deal with two distinct sets of interests. Because of this, even in cases when a company and its directors reach a waiver, the company's creditors may still be able to pursue compensatory damages for the misconduct of the directors.

Gian Maria Celardi, Italian Lawyer with experience in legal departments of financial institutions, has joined BussolettiNuzzo Avvocati in 2022. He focuses on civil and commercial legal cases with broad knowledge and expertise also in banking litigation.